Stocks in Asia traded lower Wednesday morning amid growing uncertainty over the high-level trade negotiations between the U.S. and China due to commence later this week.
Mainland Chinese stocks declined in early trade, with the Shanghai composite down about 0.5% and Shenzhen component declining 0.65%. The Shenzhen composite also slipped 0.587%.
Hong Kong’s Hang Seng index shed 0.51% as shares of Hong Kong Exchanges and Clearing fell 1.12%.
The Nikkei 225 in Japan slipped 0.9% while the Topix index shed 0.65%. In Australia, the S&P/ASX 200 declined 0.79% as most of the sectors traded lower.
Overall, the MSCI Asia ex-Japan index shed 0.5%.
Markets in South Korea are closed on Wednesday for a holiday.
US-China tensions
Investors watch for market reaction to overnight developments in U.S.-China tensions. Washington expanded its trade blacklist to include some of China’s top artificial intelligence firms on Monday, in response to Beijing’s alleged treatment of predominantly Muslim ethnic minorities. For its part, China’s Ministry of Commerce said the U.S. should “stop interfering” in the country’s internal affairs and “remove” the relevant entities from the list “as soon as possible.”
Those latest developments cloud the outlook for the upcoming U.S.-China trade negotiations, set to kick off on Thursday amid the looming prospect of more tariffs from Washington on goods from Beijing. The White House has scheduled an increase in U.S. tariffs on $250 billion worth of Chinese goods to 30% from 25% on Oct. 15. U.S. President Donald Trump has said the increase in duties will kick in if no progress is made in bilateral trade negotiations.
“It is clear from just the events of today and recent days that the trade negotiations with China are definitely not getting any closer to resolution. If anything, they’re getting further away,” Carl Tannenbaum, chief economist at Northern Trust, told CNBC’s “Squawk Box” on Wednesday.
“The two sides — even though there are still negotiations scheduled for Thursday of this week in Washington — seem to be taking steps on both sides to distance themselves from one another,” Tannenbaum added. “In that context, the trade headwind that the economy has been facing around the world is certainly going to remain there if not intensify.”
The protracted trade fight between the U.S. and China has already lasted for more than a year, with both parties slapping tariffs on billions of dollars worth of each other’s goods, denting investor sentiment and raising fears over the outlook for the global economy.
Asia-Pacific Market Indexes Chart
Overnight on Wall Street, stocks tumbled amid the dented hopes for a U.S.-China trade deal. The Dow Jones Industrial Average plunged 313.98 points to close at 26,164.04 while the S&P 500 slipped 1.6% to end its trading day stateside 2,893.06. The Nasdaq Composite dropped 1.7% to close at 7,823.78.
Currencies and oil
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 99.099 after touching highs around the 99.2 handle yesterday.
The Japanese yen traded at 107.06 against the dollar after strengthening from levels above 107.3 in the previous session. The Australian dollar changed hands at $0.6737 after falling from levels above $0.675 yesterday.
Oil prices edged lower in the morning of Asian trading hours, with international benchmark Brent crude futures slipping 0.41% to $58.00 per barrel. U.S. crude futures declined 0.42% to $52.41 per barrel.
—CNBC’s Fred Imbert contributed to this report.
